Indian export offers for high grade iron ore fines (with Fe content of 63.5 percent and higher) have moved sideways within a narrow range of $61-62/mt CFR China in the past week as the market has continued to remain weak with buyers retreating in anticipation of increasing downward pressures on prices, traders said on Friday, June 26.
"There has been very little activity during the past week. Buyers have preferred to pull back awaiting another bout of downward pressure. Unsure of short-term directions, exporters have also held on to their offer levels even as very few transactions have been reported in the market," an Orissa-based miner-exporter said.
"There have been narrow variations in offers of around $0.50/mt over the past week. Dull trading conditions have also been accentuated by the spread of monsoon rains across iron ore-producing provinces and several mines have been preparing to reduce operations as rainfall becomes heavier," the miner-exporter added.
Several sources said that pessimism prevails in the market. Large over-bought futures positions built up at levels of $65-66/mt have been unwound and this has put pressure on the physical market.
At the same time, the drawdown of stocks at Chinese ports might has been exaggerated and anticipation of aggressive restocking by traders representing Chinese steel mills has been short-lived, impacting sentiments, the sources added.
According to an Orissa-based trader, Indian offers carry the risk of falling below the $60/mt mark again in the short term in the absence of support from purchases of higher volumes.